Zain, Kuwait's No.1 telecom operator by subscribers, reported a 14 per cent rise in second-quarter profit on Sunday, halting an extended earnings slump and aided by reduced foreign exchange losses.

The firm had posted falling profits in seven of the preceding eight quarters as tougher domestic competition, service interruptions and higher costs in war-torn Iraq, and foreign exchange volatility weighed on the bottom line.

However, the former monopoly, which operates in eight countries in the Middle East and Africa, made a net profit of KD45 million ($149 million) in the three months to June 30.

Zain did not provide a comparative figure but, according to Reuters data, it made KD39.2 million ($129.6 million) a year earlier.

Its second-quarter profit beat forecasts from EFG Hermes and SICO Bahrain of KD36.2 million ($119.6 million) and KD37.4 million ($123.65 million) respectively.

Foreign exchange losses fell to $22 million, from $35 million in the prior-year period, Zain said in a statement, and second-quarter revenue dropped 3 per cent to KD275 million ($909.2 million).

Chief executive Scott Gegenheimer said Jordan, Saudi Arabia and Sudan all experienced healthy growth in the first half of this year, when Zain recorded a 2 per cent increase in total net profit to KD82 million ($271.1 million).

However, the impact of the continuing conflict in Iraq on its business was being compounded by the introduction of a 20 per cent sales tax on mobile services in the country, while its home market of Kuwait was witnessing intense price competition between operators.

In Kuwait, Zain competes with Ooredoo Kuwait, a unit of Qatar's Ooredoo, and Viva, an affiliate of Saudi Telecom Co (STC).

Gegenheimer said that initiatives the company was implementing in the Kuwaiti market would hopefully result in "incremental revenue generation", without elaborating. - Reuters